DETROIT - The Detroit Public Schools (DPS) district's money situation is on the edge of disaster.

The emergency manager is out the district is looking for new leadership while there is a half-baked plan to fix the problem.

Local 4 bankruptcy expert Doug Bernstein, who is Plunkett Cooney law firm's lead bankruptcy attorney, said bankruptcy for DPS is a complete unknown, and it's not something that always works anyway.

"If you're out of cash, you know, it looks like bankruptcy could be the route the district may end up in," he said.

Bernstein has a special place in his heart for DPS. His father was a principal in the district years ago. Bernstein now watches the governor's attempt to fix DPS with an old company/new company bankruptcy-style model and worries.

"Yes, it's good that you get rid of the debt. Show me what you're doing with the money you now have available, what you are going to buy, how you are going to get class sizes down, how you're going to fix the buildings," he said.

The biggest problem he sees is the fact the governor assumes that when and if the legislature passes his DPS plan, everyone -- including creditors and teachers -- will rejoice.

"The school district isn't in the position where creditors or even the teachers can upset the plan ... you've got the chaos," he said.

Bankruptcy has never been used in the United States for a school district. However, Bernstein worries bankruptcy will find DPS instead of the other way around.

"Every day that you don't have a deal done makes it more likely that you won't have a choice," he said.

Governor Rick Snyder's office released this statement:

"Bankruptcy for the Detroit Public Schools should only be considered a last resort because it would be bad for everyone involved. We're working with our partners in the legislature to rectify the situation that will improve finances and academics for public school students in Detroit, getting them the best education possible."

Eastern Michigan University's Board of Regents has decided to withdraw from the agreement with Detroit Public Schools that led to the creation of Gov. Rick Snyder's controversial Education Achievement Authority.

The regents voted unanimously on Friday, with Chairman Mike Morris absent, to give notice of the university's intent to withdraw under terms of the agreement first approved in 2011, and to terminate EMU's involvement in the EAA.

Under terms of the agreement, EMU can withdraw on June 30 of any given year but must give 180 days notice, so the decision won't be effective until June 30, 2017.

But given legislative efforts under way in Lansing, EMU officials expect the EAA to cease to exist well before that time.

"From the beginning, Eastern's objective in this effort has been focused on helping the students of Detroit and trying to improve educational outcomes," Morris said in a statement released by EMU following the decision.

"We are taking this action today because it is the right thing to do for our university. It is increasingly clear that the anticipated legislation in Lansing to formally address this matter and end the EAA is now moving forward."
Senate Majority Leader Arlen Meekoff told The Detroit News on Wednesday the EAA would not be part of a $715 million plan to rescue the Detroit Public Schools.

"It's gone. We're not going to do the EAA again," Meekhof told The Detroit News, calling the move away from the EAA one of several accommodations Republicans will make to get Democrats on board with the larger plan.

The EMU regents meeting room in Welch Hall was packed to its 135-person capacity for Friday's meeting. Those who couldn't get seats were directed to a spillover room across the hall with a live video feed of the meeting.

Friday's meeting came only days after a vote of no confidence in the regents by the EMU Faculty Senate, alleging the regents violated the school's code of ethics by continuing a partnership with the EAA. Friday's decision to end the partnership was welcomed by faculty and others in attendance, though that didn't spare regents from hearing some criticisms over the situation.

The EAA is a partnership between the state, Detroit Public Schools and EMU to administer a number of schools that were taken by the state, removed from DPS, and put into the EAA, which is overseen by the state, with a majority of the board members appointed by the governor. The EAA oversees 15 schools — nine charter elementary/middle schools, and six high schools.

There has been much controversy surrounding the EAA, which has been criticized for poor academic performance and declining enrollment.

There also has been an FBI investigation into the EAA for alleged kickback schemes involving vendors.

Also hurting EMU is the fact that some local school districts have refused to accept student teachers from EMU because of the university's affiliation with the EAA.

EMU Student Body President Steven Cole expressed hopes on Friday that student teachers will be able to go back to placements in local school districts.

"It's encouraging to see that they voted to withdraw from the agreement. It's been overdue, a vote we've been asking for," he said. "And the community has been urging for two years now to get out."

Judith Kullberg, president of the EMU Faculty Senate, said withdrawing from the EAA allows the entire EMU community to move forward, redoubling its commitment as an institution of opportunity where students learn in and beyond the classroom to benefit the global and local communities.

"We need to focus on how we can realize our shared vision of EMU as a premier public university, recognized for student-centered learning, high-quality academic programs and community impact," she told regents at Friday's meeting.

"As the president of Faculty Senate, I can assure you the entire faculty is committed to this vision, and we look forward to working with you to achieve it."

Snyder has said in the past he was open to disbanding the EAA as part of a deal with the Legislature on Detroit schools.

Dave Murray, a spokesperson for Snyder, offered a statement on behalf of the governor's office on Friday.

"The Education Achievement Authority has embraced innovation and pioneered a holistic approach to helping children and their families work toward a brighter future," he said. "We appreciate the important and hard work of Chancellor Veronica Conforme, her faculty and staff and the investment they have made in Detroit's children. We intend to see that work continue."

He added, "While we understand that EMU has chosen to end its partnership with this endeavor, we are hopeful that the Legislature will consider new ways to improve academics in all Detroit schools so that all students have the opportunity to be successful."

EMU regents said in 2014 they would withdraw from the EAA partnership if a faculty review found it had not improved, but when that review was finished in December the regents chose to postpone voting on the issue.

EAA Chancellor Veronica Conforme urged regents not to renew the agreement with Detroit Public Schools ahead of Friday's meeting.

"I encourage the board members to vote to end the interlocal agreement," Conforme said in a statement. "This saga has gone on for far too long and has made our teachers, students and parents feel like political pawns. I recognize the interlocal agreement has negatively impacted both our students and the university in many ways and has not allowed for our long-term success. The founding governance structure of the EAA lacks stability and is an unsustainable model.

"It's time to start putting our students first by exploring every option and settle on a permanent solution that provides stability to our schools and provides our students with the high-quality education they deserve," Conforme added.

"The support of the board has produced tremendous innovations for Detroit, and for that, I am greatly appreciative. Going forward, I intend to see those innovations take root and become a lasting part of this city's plan for education."

Ryan Stanton covers the city beat for The Ann Arbor News. Reach him at ryanstanton@mlive.com.

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